Way-bill value verification and under-invoicing justified seizure, while the penalty was upheld in principle but reduced.

Under the unamended rule 212(9) and rule 212(10) of the West Bengal Sales Tax Rules, 1995, the checking authority was entitled to make a meaningful enquiry into the correctness of the value declared in the way-bill, including reasonable verification against market value and other available data. Where the declared value was found to differ from the actual value, seizure of goods was permissible under the statutory scheme for contravention of section 68, and the challenge to seizure failed. The penalty was sustained in principle because contravention was established, but its quantum was reduced after separate consideration of the circumstances.

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Issues: (i) Whether, under the unamended rule 212(9) and rule 212(10) of the West Bengal Sales Tax Rules, 1995, the checking authority could verify the correctness of the value shown in the way-bill by enquiry into the actual value and seize goods on the basis of under-invoicing. (ii) Whether the penalty imposed for the detected contravention required interference.

Issue (i): Whether, under the unamended rule 212(9) and rule 212(10) of the West Bengal Sales Tax Rules, 1995, the checking authority could verify the correctness of the value shown in the way-bill by enquiry into the actual value and seize goods on the basis of under-invoicing.

Analysis: The verification power under rule 212(9) was construed to extend beyond a mere physical comparison of documents and goods. The expression permitting verification of the correctness of the value shown in the way-bill was held to authorise a meaningful inquiry into genuineness and accuracy, including reasonable enquiry into market value and other available data. Rule 212(10) was read as confirming that, where the declared value was found at variance with the value actually found, seizure could follow under section 70 for contravention of section 68. The earlier view treating under-invoicing as outside the pre-amendment scheme was held not to control the interpretation of the unamended rules.

Conclusion: The authority had power to verify the correctness of value and to seize the goods where under-invoicing was found; the seizure was upheld.

Issue (ii): Whether the penalty imposed for the detected contravention required interference.

Analysis: The finding of contravention and the basis for penalty were sustained on the materials, but the quantum of penalty was examined separately. The authority had added 25 per cent to the determined purchase value without a specific enquiry into the actual market sale price, and the Tribunal considered the circumstances, including the prevailing view at the relevant time and the nature of the determination, for reduction of the amount.

Conclusion: The penalty was sustained in principle but reduced in quantum.

Final Conclusion: The application failed on the challenge to seizure and liability, but partial relief was granted by reducing the penalty amount.

Ratio Decidendi: Under the pre-amendment scheme of rule 212(9) and rule 212(10), the checking authority could meaningfully verify the correctness of the declared value by reasonable enquiry, and under-invoicing could justify seizure and consequential penalty under the statutory mechanism.

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